Rand Rallies as Dollar Stumbles Amid Tariff and Political Uncertainty

The South African rand showed renewed strength on Wednesday morning, trading at R18.94 to the U.S. dollar—up about 0.4% from its previous close. The gain follows a broader slip in the U.S. dollar, which fell around 0.7% against a basket of global currencies as markets responded to growing uncertainty over American tariffs.

Investors around the globe remain on edge as U.S. President Donald Trump’s escalating trade war with China continues to unsettle the markets. China is South Africa’s largest trading partner, and the economic standoff has begun to ripple through global currency dynamics.

“There has been little change on the tariff front overnight, but the trade war between the U.S. and China continues to escalate,” said Andre Cilliers, currency strategist at TreasuryONE.

Rand Outlook Tied to Coalition Politics

While international markets weigh heavily on the rand, local investors are also closely watching developments within South Africa’s coalition government. The Government of National Unity (GNU) is still at odds over a proposed value-added tax (VAT) increase scheduled for May 1.

ETM Analytics notes that while the rand’s recent gains have mostly played out, more positive news from the GNU—especially an agreement on the budget—could support further recovery. “The ZAR’s near-term recovery has largely played out, but it could extend to any more positive news from the GNU regarding a budget most parties can support,” the firm said in a research note.

Eyes on Economic Data

On the domestic data front, investors are awaiting key releases that could sway market sentiment. South Africa’s business confidence index for March is due at 09:30 GMT, followed by February’s retail sales figures at 11:00 GMT. Both indicators will provide a clearer picture of the country’s economic direction.

Markets and Bonds Remain Cautious

The Johannesburg Stock Exchange’s Top-40 index was little changed in early trading. Meanwhile, government bonds showed a slight improvement, with the benchmark 2030 bond yield easing one basis point to 9.21%.

As both global and domestic uncertainties continue to unfold, the rand’s movement will likely remain sensitive to both tariff updates and political developments at home.

{Source: BusinessTech}

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